The Economic Benefits of Shale Natural Gas in OH, WV & PA

by Duane Nichols on December 20, 2011

A new report from Ohio State University raises some questions that political leaders seem to want to ignore about the economic benefits of West Virginia’s Marcellus boom, as shown in the Sustained Outrage blog of the Charleston (WV) Gazette.  The report is called Economic Value of Shale Natural Gas in Ohio and was prepared by Amanda Weinstein and Mark Partridge of the Department of Agricultural, Environmental and Developmental Economics at The Ohio State University. It concludes:

Does all of this also mean that natural gas will create significant numbers of job for Ohioans? Previous studies on the economic impacts of natural gas appear to have widely overstated the economic impacts. This is not surprising, as these studies are typically industry-funded and industry-funded studies are usually not the best sources of information for economic effects (regardless of the industry).

Even if the natural gas industry experiences significant job growth, its employment share is too small to have any significant effect on unemployment rates and on the economy (with the exception of remote rural areas such as in rural Western North Dakota). Previous studies on the economic impacts also fail to account for the displacement effects that the natural gas industry will have on other industries. Finally, from a national perspective greater natural gas production will displace other fossil fuels and their workers as they are no longer needed, in particular coal.

Raising expectations that natural gas will not be able to meet is setting Ohio residents up to be disappointed. The true benefits of natural gas need to be highlighted while putting the costs into perspective. Likewise, Ohio needs to plan today about how to make some of the gains from the energy boom permanent. Among many things, this will require innovative policies and funding models to ensure that infrastructure is paid for today and there is adequate funding to maintain that infrastructure in the future.

Somewhat similar conclusions were reached by Prof. Thomas Kinnaman of Bucknell University, Lewisburg, Pennsylvania, as reported at the “Drilling Down on Marcellus”  Workshop held at the WVU College of Law this past October.  It would appear that when cost/benefit analysis work is done by economists in West Virginia, there are no socioeconomic costs, no infrastructure or environment impacts to be included.

{ 2 comments… read them below or add one }

Blakeslee December 21, 2011 at 3:29 pm

“It would appear that when cost/benefit analysis work is done by economists in West Virginia, there are no socioeconomic costs, no infrastructure or environment impacts to be included.”

How would these “costs” be calculated in dollars?


Duane Nichols December 21, 2011 at 9:07 pm

An article entitled “The Questionable Economics of Shale Gas” can be found on a blog called SMART PLANET. It raises some serious considerations, as shown here:


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